FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-11095
NATIONAL PROPERTY INVESTORS 5
(Exact name of small business issuer as specified in its charter)
California 22-2385051
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) NATIONAL PROPERTY INVESTORS 5
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1996
Assets
Cash and cash equivalents $ 1,903
Other assets 1,346
Investment properties:
Land $ 2,457
Buildings and related personal property 30,457
32,914
Less accumulated depreciation (21,734) 11,180
$ 14,429
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 550
Tenant security deposits 117
Mortgage notes payable 14,583
Partners' Capital (Deficit):
Limited partners' (82,513 units issued and
outstanding) $ 405
General partner's (1,226) (821)
$ 14,429
<FN>
See Accompanying Notes to Financial Statements
b) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues:
Rental income $ 1,342 $ 1,378 $ 4,052 $ 4,127
Other income 99 95 343 254
Total revenues 1,441 1,473 4,395 4,381
Expenses:
Operating 919 880 2,527 2,635
Interest 338 342 1,010 1,028
Depreciation 333 359 988 1,075
General and administrative 67 53 224 173
Total expenses 1,657 1,634 4,749 4,911
Net loss $ (216) $ (161) $ (354) $ (530)
Net loss allocated to
general partner (3%) $ (7) $ (5) $ (11) $ (16)
Net loss allocated to
limited partners (97%) (209) (156) (343) (514)
$ (216) $ (161) $ (354) $ (530)
Net loss per limited
partnership unit $ (2.54) $ (1.89) $ (4.16) $ (6.23)
See Accompanying Notes to Financial Statements
c) NATIONAL PROPERTY INVESTORS 5
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 82,513 $ 1 $ 41,257 $ 41,258
Partners' capital (deficit) at
December 31, 1995 82,513 $ (1,215) $ 748 $ (467)
Net loss for the nine months
ended September 30, 1996 -- (11) (343) (354)
Partners' capital (deficit) at
September 30, 1996 82,513 $ (1,226) $ 405 $ (821)
See Accompanying Notes to Financial Statements
d) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net loss $ (354) $ (530)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 988 1,075
Amortization of loan costs 58 59
Change in accounts:
Other assets (338) (118)
Accounts payable and accrued expenses 301 307
Tenant security deposit liabilities (7) (9)
Net cash provided by operating activities 648 784
Cash flows from investing activities:
Property improvements and replacements (401) (212)
Net cash used in investing activities (401) (212)
Cash flows from financing activities:
Payments of mortgage notes payable (146) (132)
Net cash used in financing activities (146) (132)
Net increase in cash and cash equivalents 101 440
Cash and cash equivalents at beginning of period 1,802 1,325
Cash and cash equivalents at end of period $ 1,903 $ 1,765
Supplemental information:
Cash paid for interest $ 976 $ 969
<FN>
See Accompanying Notes to Financial Statements
e) NATIONAL PROPERTY INVESTORS 5
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of National Property Investors 5
(the "Partnership") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine month periods ended September 30, 1996, are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1996. For further information, refer to the financial statements
and footnotes thereto included in the Partnership's annual report on Form 10-K
for the year ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
NPI Equity is the general partner of the Partnership. NPI Equity is a wholly-
owned subsidiary of National Property Investors, Inc. ("NPI").
On August 17, 1995, the stockholders of NPI entered into an agreement to sell to
IFGP Corporation, a Delaware corporation, an affiliate of Insignia Financial
Group, Inc. ("Insignia"), a Delaware corporation, all of the issued and
outstanding common stock of NPI. The closing of the transactions contemplated
by the above mentioned agreement (the "Closing") occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI and the Managing General
Partner resigned and IFGP Corporation caused new officers and directors of each
of those entities to be elected.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES - (continued)
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were charged to expense in 1996 and 1995:
For the Nine Months Ended
September 30,
1996 1995
Property management fees (included in operating
expenses) $ 215,000 $ 208,000
Reimbursement for services of affiliates (included
in general and administrative and operating
expenses) 181,000 166,000
For the period of January 19, 1996, to September 30, 1996, the Partnership
insured its properties under a master policy through an agency and insurer
unaffiliated with the Managing General Partner. An affiliate of the Managing
General Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the Managing General Partner who
received payments on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
Managing General Partner by virtue of the agent's obligations is not
significant.
Included in operating expenses for the nine months ended September
30, 1995, are insurance premiums of approximately $154,000 which were paid to
the Managing General Partner under a master insurance policy arranged for by the
Managing General Partner.
NOTE C - TENANT-IN-COMMON PROPERTY
The Partnership currently owns The Village Apartments, as a tenant-in-common
with National Property Investors 6 ("NPI 6"), an affiliated public limited
partnership. NPI 6 acquired a 75.972% undivided interest with the Partnership
owning the remaining 24.028%. The property is accounted for using the
proportionate consolidation method. The financial statements and supplementary
data reflect the Partnership's 24.028% proportionate share of historical cost
of this property.
The condensed, combined balance sheets of The Village Apartments and the
Partnership's proportionate share of assets, liabilities and equity at September
30, 1996, and the condensed, combined statements of operations of The Village
Apartments and the Partnership's proportionate share of revenues and expenses
for the nine and three month periods ended September 30, 1996 and 1995, are
summarized as follows:
(In thousands)
PROPORTIONATE
COMBINED SHARE
September 30, September 30,
1996 1996
Total assets, primarily real estate $ 12,910 $ 3,042
Liabilities, primarily a mortgage payable $ 11,344 $ 2,726
Equity 1,566 316
Total liabilities and equity $ 12,910 $ 3,042
COMBINED PROPORTIONATE SHARE
For the Nine Months Ended For the Nine Months Ended
September 30, September 30,
1996 1995 1996 1996
Total revenues $ 3,419 $ 3,292 $ 822 $ 791
Operating and other expenses $ 1,879 $ 1,871 $ 451 $ 450
Depreciation 553 559 133 134
Mortgage interest 752 761 181 183
Total expenses 3,184 3,191 765 767
Net income $ 235 $ 101 $ 57 $ 24
NOTE C - TENANT-IN-COMMON PROPERTY - (continued)
COMBINED PROPORTIONATE SHARE
For the Three Months Ended For the Three Months Ended
September 30, September 30,
1996 1995 1996 1995
Total revenues $ 1,179 $ 1,124 $ 284 $ 270
Operating and other expenses $ 665 $ 667 $ 160 $ 161
Depreciation 189 186 45 44
Mortgage interest 251 254 61 61
Total expenses 1,105 1,107 266 266
Net income $ 74 $ 17 $ 18 $ 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
The Springs of Altamonte Apartments
Altamonte Springs, Florida 96% 97%
Oakwood Village at Lake Nan Apartments
Winter Park, Florida 89% 95%
Palisades Apartments
Montgomery, Alabama 88% 92%
The Village Apartments (1)
Voorhees, New Jersey 94% 95%
(1) This property was purchased as a tenancy in common with National Property
Investors 6, an affiliated public partnership, which acquired a 75.972%
undivided interest, with the Partnership owning the remaining 24.028%.
The Managing General Partner attributes the decrease in occupancy at Oakwood
Village to road construction in the area, which included the re-routing of the
road to the property. Construction was completed during the 3rd quarter of 1996,
and management is working on road signs and maps to the property in order to
attract new tenants. Occupancy decreased at Palisades Apartments partly due to
evictions of tenants with large delinquent rent balances. Management expects
that this action will reduce bad debt expense in the future. Currently,
improvements at the property, including the building of a guard house at the
front entrance, are expected to improve overall appearance and occupancy.
The Partnership's net loss for the nine months ended September 30, 1996, was
approximately $354,000 compared to a net loss of approximately $530,000 for the
corresponding period of 1995. The net loss for the three months ended September
30, 1996, was approximately $216,000 compared to a net loss of approximately
$161,000 for the three months ended September 30, 1995. The decrease in net
loss for the nine months ended September 30, 1996, is primarily attributable to
an increase in other income and a decrease in operating expenses. The increase
in other income is primarily due to increased interest income resulting from
increased cash reserves held by the Partnership. Also contributing to the
increase in other income was an increase in lease cancellation and application
fees in 1996. For the nine month period, operating expenses declined mostly due
to reductions in maintenance expense and insurance expense at the properties.
Partially offsetting these decreases to expense was an increase in general and
administrative expenses. As noted in "Item 1, Note B - Transactions with
Affiliated Parties," the Partnership reimburses the Managing General Partner and
its affiliates for its costs involved in the management and administration of
all partnership activities. While overall expense reimbursements have increased
during the three and nine month periods ended September 30, 1996, the recurring
expenses subsequent to the transition efforts to the new administration are
expected to more closely approximate historical levels. The increase in expense
reimbursements during the three and nine month periods ended September 30, 1996,
is directly attributable to the combined transition efforts of the Greenville,
South Carolina, and Atlanta, Georgia, administrative offices during the year-end
close, preparation of the 1995 10-K and tax return (including the limited
partner K-1's), filing of the first two quarterly reports and transition of
asset management responsibilities to the new administration.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due
to changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.
At September 30, 1996, the Partnership had unrestricted cash of $1,903,000, as
compared to $1,765,000 at September 30, 1995. Net cash provided by operating
activities decreased primarily as a result of increases in escrow funding. The
increase in cash used in investing activities is due to increased property
improvements and replacements in 1996.
The Managing General Partner has extended to the Partnership a $500,000 line of
credit. At the present time, the Partnership has no outstanding amounts due
under this line of credit, and the Managing General Partner does not anticipate
the need to borrow in the near future. Other than cash and cash equivalents the
line of credit is the Partnership's only unused source of liquidity.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The mortgage indebtedness of $14,583,000 matures at various times with balloon
payments due at maturity at which time the properties will either be refinanced
or sold. Future cash distributions will depend on the levels of net cash
generated from operations, property sales and the availability of cash reserves.
No cash distributions were made in 1995 or during the first nine months of 1996.
Currently, the Managing General Partner is evaluating the feasibility of a
distribution of cash reserves in the fourth quarter of 1996.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report.
b) Reports on Form 8-K: None filed during the quarter ended September 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL PROPERTY INVESTORS 5
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date:November 4, 1996